State's troubles mean capital pain

Albany region's smaller size makes it more vulnerable to state government job losses

By Chris Churchill Business writer

Published 12:25 am, Wednesday, March 16, 2011

ALBANY -- A new report on economic conditions in urban areas nationally says the Capital Region's recovery from recession is unusually sluggish.

The primary reason? State government job losses.

In fact, the Brookings Institution report says only two of the nation's larger state capitals -- Phoenix and Boise, Idaho -- have lost a higher percentage of state-government jobs during the downturn than the Capital Region.

And that's before the full brunt of reductions that are possible here as the Legislature wrestles with a daunting budget deficit.

Yet New York is hardly the only state that has been reducing its payroll, as Brookings reports that 48 of the nation's 100 largest metropolitan areas saw reductions in state government jobs.

"That's quite a number," said Richard Shearer, a Brookings researcher who coauthored the Metro Monitor report. "You usually expect state government to be more stable than that."

Brookings says the Capital Region has lost 5,290 state government jobs during the economic downturn, a fall of 9.8 percent. Only six of the nation's 100 largest areas had a bigger loss.

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Best and the worst

The Capital Region is among the 100 largest metropolitan areas hit hardest by losses in state government jobs since the start of the recession:

PerCenT CHANGE

Area state JOBS Rank

Charlotte, N.C.+17.7% 1

Dayton, Ohio+15.8% 2

Greensboro, N.C.+14.5% 3

Capital Region--9.8% 94

Phoenix--11.9% 95

St. Louis--11.9% 96

Boise, Idaho--12.2% 97

San Jose--15.1% 98

Milwaukee--15.5% 99

New Orleans--28.5% 100

Source: Brookings Institution

Many of the metros with higher percentage losses, such as Milwaukee or San Jose, are not centers of state employment in the way Albany is.

"Most of those places have larger economies," Shearer said. "Albany is smaller and its economy is more dependent on jobs in state government."

The report from Brookings, a Washington, D.C.-based research group, found that the Capital Region was among the 20 areas nationally recovering most slowly from the recession.

The New York City and Springfield, Mass., areas we're also included on the list of weak performers.

But it wasn't entirely negative about the Capital Region's economy, noting that the area didn't fall as deeply into the recession as much of the rest of the country.

In large part, that's because the recession was particularly difficult for cities where a housing boom led to a bust. The Capital Region avoided that scenario.

Indeed, Brookings says that while home prices here have declined 8.2 percent from the pre-recession peak, that's well below the 23.6 percent fall that's the average for U.S. metro areas.

Also, the report ranked the Capital Region second best among the 100 areas for its percentage of bank-owned foreclosed homes, meaning the area has mostly dodged the distressed properties crisis that rocked states like Florida, Arizona and California.

But it didn't dodge state government job reductions, which mostly resulted from a hiring freeze and attrition.

The Brookings finding of 5,290 state government job losses is derived from federal data, but mostly jibes with statistics from the state Labor Department.

James Ross, who analyzes Capital Region employment data for the Labor Department, said Tuesday there are 48,200 state government jobs here, accounting for 11.4 percent of the area's total.

When employment by local governments and schools is included, the public sector accounts for about 25 percent of the region's jobs.